ZURICH (Reuters) - Clariant (CLN.S) is cutting up to 600 jobs after 2019 profit plunged, as the Swiss speciality chemicals maker braces for a sluggish economic environment and adverse foreign exchange conditions this year, it said on Thursday.
Its shares were indicated about 1% higher before the market open JBPRE01, with the Muttenz-based company forecasting the job reductions over two years would reduce costs by 50 million Swiss francs ($51 million) annually and boost profitability.
Net profit in 2019 slumped to 38 million francs, from 356 million in 2018, Clariant said, as it set aside cash to cover an EU competition probe. A weaker performance in its discontinued operations and higher taxes also weighed.
Sales at continuing businesses dipped to 4.39 billion francs from 4.4 billion, it said in a statement. In the fourth-quarter, sales stagnated at 1.2 billion francs, amid muted demand in all three of the company’s remaining divisions.
Clariant is undergoing a makeover after years of turbulence, unloading businesses that account for a third of its sales as it focuses on what it hopes will be faster-growing catalysis chemicals, products for the oil and gas industry, and ingredients for soaps and shampoos.
It replaced its chief financial officer (CFO) on Tuesday after the previous CFO took a new job at shipper Maersk <MAERSKb.CO. and is still hunting for a new CEO after the previous boss quit suddenly last year, leaving Chairman Hariolf Kottmann to take the reins on an interim basis.
“For 2020, given the current sluggish economic environment and continued adverse foreign exchange conditions, growth will be more limited and additional efficiency measures have been defined for each of the businesses to support the margin increase,” the company said.
“These measures will lead to a workforce reduction of approximately 500 to 600 positions over the next two years and imply a cost base reduction of approximately 50 million Swiss francs.”
Clariant said its hunt for a new CEO was ongoing and there was no set timeline for a replacement to be named.
Previous CEO Ernesto Occhiello left in mid-2019, a day before the company announced the collapse of a planned joint venture with Saudi Basic Industries, Clariant’s biggest shareholder with a 25% stake.
Clariant is reviving the sale of its pigments unit, people familiar with the matter told Reuters earlier this year, which may fetch up to 900 million francs as the company slims down after failing to combine with peers.
It is expected to complete the deal this year.
Reporting by John Miller, Editing by Michael Shields and Mark Potter